NEW YORK (TheStreet) -- On Thursday morning, it was confirmed that Avago Technologies (AVGO) has agreed to acquire fellow chip maker Broadcom (BRCM) in a deal worth $37 billion, a day after reports of the deal sent Broadcom's shares spiraling 21%.

All 30 components of the PHLX Semiconductor Index, also known as the SOX, rose on Wednesday on reports that the two components of the index were close to a deal. Avago advanced 7.8% on Wednesday. The SOX rallied 3.9% on the day, setting a multiyear intraday high of 744.77. The SOX is now up 8.1% year to date.

Given the spike to an all-time intraday high for Avago, investors will be focusing on the volatility that will follow the company's earnings report scheduled for release after the closing bell on Thursday. Analysts expect Avago to post earnings of $1.83 a share. The company has beaten analysts' estimates 17 quarters in a row.

Avago went public in August 2009, and Broadcom was a victim of the tech bubble with an all-time high of $183.16 set in August 2000 versus Wednesday's multiyear intraday high of $57.69.

Let's take a look at the daily and weekly charts for Avago and outline the investing guidelines for the stock. Then, we'll look at the weekly chart for Broadcom.

Here's the daily chart for Avago.


Courtesy of MetaStock Xenith

Avago closed at $141.49 on Wednesday, up 41% year to date after the stock set an all-time intraday high of $144.82. Avago has been on a strong momentum run-up since testing its 200-day simple moving average on Oct. 13, when the average was $68.40. Note how the stock tracked its 50-day simple moving average and last crossed this key trend line at $125.85 on May 14. Shares of Avago are way above their 200-day simple moving average, which is now at $102.72.

Here's the weekly chart for Avago.


Courtesy of MetaStock Xenith

The weekly chart has been positive since May 22, with its close above the key weekly moving average of $128.55, as the stock's momentum reading rose from 62.81 on May 15 to 64.26 on May 22. Momentum is expected to rise to 69.30 this week.

Investors looking to buy Avago should place a good-till-canceled limit order to purchase the stock if it drops to $122.18, which is a key level on technical charts until the end of June.

Investors looking to protect long-term gains should consider employing a sell stop given a weekly close below its key weekly moving average of $128.55. This average will be rising each week.

Here's the weekly chart for Broadcom.


Courtesy of MetaStock Xenith

The weekly chart shows the stock's popped bubble at the left side of the chart from a peak of $183.16 a share in August 2000.

The weekly chart is positive but overbought with the stock above its key weekly moving average of $47.88. The 200-week simple moving average has been a long-term reversion to the mean since June 2004 with this average now at $34.86.

The momentum reading of 82.74 is projected to be above the overbought threshold of 80.00.

Investors looking to buy Broadcom should place a good-till-canceled limit order to purchase the stock if it drops to $47.70, which is a key level on technical charts until the end of May.

Investors looking to protect long-term gains should consider employing a sell stop given a weekly close below its key weekly moving average of $47.88. This average will be rising each week.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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